Deviation Leads to Aggravation

Archive for September, 2008

Charleston’s Post & Courier ran an article yesterday about those living in the poorest area of South Carolina. This passage caught my eye:

Times weren’t always this bad. The town of Allendale, just three square miles wide, once boasted dozens of motels, restaurants and mom-and-pop shops that catered to the ebb and flow of Florida-bound tourists along U.S. Highway 301. The road threaded through Orangeburg, Bamberg and Allendale counties like a ribbon of prosperity.

Then came Interstate 95, about 35 miles away, which siphoned off thousands of travelers almost overnight. Many of the old motels, diners and gas stations on U.S. 301 now sit empty and in disrepair, the skeletal remains of their signs jutting up from the tall grass and weeds The road now seems like a worn belt, binding the region in poverty.

Whenever the government constructs a new highway, it is in effect subsidizing the location decisions of people and businesses by making the area around the road much more valuable than it otherwise would be. As the article–and, a friend reminded me once, the movie Cars–illustrates , this can have dramatic effects on people’s livelihoods. Given these effects, how can it be decided when a new road is warranted?

Perhaps the simplest answer is to figure out if people will pay to use the road at a level sufficient to cover its costs. Adam Smith put it well over 225 years ago:

When high roads, bridges, canals, &c. are in this manner made and supported by the commerce which is carried on by means of them, they can be made only where that commerce requires them, and consequently where it is proper to make them.

If something–whether it be a new mp3 player, suitcase, theme park, movie, or whatever–is not thought to be commercially viable, this is a strong signal that the thing ought not be produced. Odd that this useful test is not often used for the construction of roads.

(9:42) Perhaps it’s the angle of the podiums or the cameras, but whenever the candidates are shown side by side in split-screen, they’re always facing a quarter turn away from each other, as if each were afraid the other might copy his notes.

(9:37) Obama said “orgy” in a presidential debate. Can he do that?

(9:35) McCain: He got plans, too.

(9:25) Obama’s plan will have cars being built in Ohio and Michigan, ignoring the fact that nobody likes cars built in Ohio and Michigan.

(9:20) McCain looks sheepish when Obama notes correctly that although corporate tax rates are high in the US, effective corporate tax rates are quite lower.

(9:16) McCain tells us that he was known in the Senate as “The Sheriff,” not “Miss Congeniality.” Checking his Senate bio reveals he was also nominated for the title of “Prince Pugnacious Pants” two years in a row.

(9:13) McCain assures us that he has a pen, enraging the pencil lobby.

(9:12) McCain says America is the “greatest exporter.” Well, Germany is the largest exporter, but I guess their exports are just good, not great.

(9:10) Lehrer’s fixation on getting the candidates to address each other reminds me of a marriage counseling session: “Now, tell him what you just told me.”

(9:09) Both candidates saw the credit crisis coming. I trust that since they did not use this prescience to prevent this crisis, they at least made millions shorting the market.

(9:08) McCain, when asked if he will vote for the bailout plan, says “I hope so,” and then when Lehrer presses him further, says “sure…sure.” Well count my confidence as inspired!

(9:05) McCain opens his remarks by thanking “Jim and everybody,” mentioning Ted Kennedy is in the hospital, and thanking the University of Mississippi for hosting. Odd juxtaposition.

(9:04) Alert squabbling economists, for the debate is over: George Bush caused the credit crisis.

(9:02) Obama says that all the attention on the crisis has been focused on Wall Street, not Main Street. I don’t live on either street so–oh, it’s the metonymy stupid!

(9:01) Obama grabs McCain’s forearm in the opening handshake, asserting his dominance. Dog trainers everywhere agree that this will best for both in the long run.

Driving home, I saw an Obama ’08 bumper sticker. In other places this would be unremarkable, but given that the area is very conservative and it was a white guy driving a beat up pick-up truck, it came to me as a pleasant surprise. I mentally congratulated my southern compatriot for defying racist stereotype and deviating from the political norm. Then I looked again, saw it was in fact a “No”bama sticker, and sighed (There’s also this version, which , notwithstanding “it’s” grammatical hiccup, tries to clear things up a bit.).

It will come as no surprise to loyal readers that I dislike politics, but in recent weeks I’ve become even more disenfranchised by it. Whereas before I saw politics’ corrupting influence as being confined to a smallish band of its practitioners and immediate associates, I see now the blackness spreading to enshroud anyone who possesses the mental faculty sufficient to form and hold opinions on the subject. Reasonable people become unreasonable, views can only fit into one of two possible narratives, and a desire for what is true becomes subservient to seeing that a certain candidate win (or lose). That politicians act the way they do is no surprise considering the bad occupational incentives, but evidently there is also plenty left over to which the public can respond.

As I peruse the Bed Bath & Beyond catalog that appears unsolicited in my mailbox periodically, I am filled with conflicting thoughts. On the one hand, I have since my first days in a freshman dorm placed a high priority on creating a gemütlich living space, and stores like Bed Bath & Beyond are valuable resources toward that end. On the other hand, I place a high priority on mobility, and accumulating lots of stuff does not auger well with this second sensibility, especially when some of the stuff is heavy or nailed to the wall.

This conflict casts my thoughts back to Germany, where I was temporarily relieved of my desire to decorate for several reasons. First, I was on a limited income that was much better spent on other things. Second, I lived in three different places in the course of the year, so settling in seemed silly. Third, two of the three places I lived were already pretty well appointed. Fourth, I entertained few guests, so I worried little about how the condition of my various abodes reflected on me to others. And perhaps most importantly, knowing that anything I bought would either have to be sold or binned at the end of year (and carried from place to place in the interim) plucked the last petal from the decorative floral wreath of my desire.

Living for a year out of two suitcases has its limitations, but I find myself missing more and more the ability to steal quickly into the night without a trace. There is also an increasing disdain and distrust of the clutter with which I am surrounded and continue to buy. I can almost perceive roots sprouting from my desk and from my bed, digging deep, anchoring me in time and place, keeping me from making further steps.

Young people aren’t supposed to have a lot of stuff. They should be able to flow like oil to the places where they are most valued. Bed Bath & Beyond shouldn’t be able to send them marketing materials and gum everything up, keeping them from their homeland. There ought to be a law.

In addition to being beautiful, intelligent, and articulate, the woman of my dreams would also greet my request for a prenuptial agreement with a carefree laugh and say, “I’ve already had the papers drawn up, darling.”

Sadly (or perhaps not?), I have more chance of securing all of the first three qualities than I do of the latter, because prenups are perceived by most to be a cynical recognition that despite the obligatory exposition of the ring’s symbolism at every ceremony, many marriages do have an end. Indeed, it would seem many consider a prenup a backhanded prediction of a given marriage’s failure since it makes divorce such a painless procedure.

This irrational sensibility is so deep, that even a Harvard lawyer who has researched prenuptial agreements and recognizes their benefits has the following to say:

“If my boyfriend suggested it to me, I would probably leave,” she admits. “It’s like you’re planning for divorce. It signals that you think there’s a positive probability for divorce.”

I understand the general sentiment, but that last sentence doesn’t make any sense. Only in a Hitler-style marriage where the honeymoon consists of chomping on cyanide and a gunshot wound to the head are the chances of divorce effectively nil. For the rest of us more inclined to bet on life, taking reasonable steps to ease the ache of possible future distress should not be considered a signal of something dastardly, even if it will probably never reach the apogee of romanticism.

There’s a limited resource: gasoline. There’s a supply shock: a hurricane has shut down refineries. There’s now less of the resource to go around. Gas will have to be rationed somehow. As a policymaker, you must respond to the crisis. What do you do?

South Carolina Attorney General Henry McMaster is invoking a state law that allows criminal penalties against gas stations that set their prices too high.

As any Econ 101 textbook would predict, this policy and others like it are resulting in gasoline shortages all over the Southeast. This is great for those who were lucky enough to get the cheap gas, but not so great for everyone else.

In the world of scarce resources in which we live, rationing is always necessary. The wonder of prices is that because they ration so well without any central direction we don’t have to understand or even think about them for the process to work. A problem comes, however, when the results of this rationing jump into the fore of our conscious because they seem to conflict with the moral intuition that it is wrong to profit from distress.

This intuition may have good properties, but one thing it is not good for is ensuring that there’s enough of a resource to go around; indeed, anti-gouging legislation, the codification of this intuition, actually reduces the quantity of a resource available during crises by eliminating the incentive effects that high prices have for increasing supply (especially in the long run). Examining the outcomes of both scenarios, therefore, renders the moral superiority of anti-gouging sentiment to be dubious.

As a consumer, not wanting to feel gouged is just as valid as a preference for a high price over no gasoline at all, and firms respond to these preferences in various ways. Legislation needn’t make criminal the response of a firm to the latter preference any more than legislation should make it criminal for clothing stores to sell white after Labor Day.

When talking to a university student in Germany, it was not an uncommon occurrence for 9/11 and government conspiracies to be mentioned. Implicit behind these seemingly sincerely held beliefs is the assumption of an all-powerful government capable of pulling off elaborate, precisely-timed plots with scrupulous attention given to the last detail.